What Can Be Done to Address the Long-Term Consequences of Student Debt?

What Can Be Done to Address the Long-Term Consequences of Student Debt?

There are many sound reasons for students to seek out the academic opportunities available at institutions of higher learning. While educational enrichment is intrinsically rewarding and therefore provides a lifetime of benefits in and of itself, the most frequently cited benefits of higher education tend to revolve around the economic advantages afforded by a degree earned at a college or university.

Until recently, few would argue the short- and long-term economic value of a degree. With students now racking up debt at such an alarming rate, the long-term economic benefits of securing a degree are no longer nearly as clear as they once were. Consider these simple facts: The average student is graduating with $10,000 more in terms of student debt today than those who graduated just over a decade ago (an average of $28,950 per student in 2014 compared to an average of $18,550 per student in 2004; over two-thirds of all students need to borrow some money to pay for the costs of attending college).

According to research and analysis conducted by the Secure Retirement Institute at LIMRA, the amount of debt the average student incurs while attending college winds up costing well over $300,000 (this estimate calculates the cost of the debt in terms of one’s expected 401(k) balance) by the time they reach retirement age. Although the overall value of a higher education is indeed incalculable, it’s clear that something must be done to ensure that talented students are not dissuaded from attending a college or university simply due to an aversion to accumulating substantial student debt.

So, what can we do to help students address all the issues surrounding student debt?

Of course, this is one of the explicit goals of the Nationwide Debt Direct Giving Scholarship, as offering scholarships to worthy students helps them avoid accumulating student debt in the first place. In addition to creating this scholarship program, our organization also continues to encourage other organizations and individuals to do their part in supporting deserving students in one way or another.

We also believe it is important to ensure students and their families fully understand the long-term consequences of student debt before they begin an academic career at an institution of higher learning. Educating students and families in this way helps ensure the development of effective strategies — including, for example, seeking out work-study programs, opening a college-specific savings accounts well in advance, etc. — to limit the total amount borrowed, thereby avoiding the accumulation of unnecessary debt.

There are quite a few systemic issues that must be addressed as well, as the onus should not be solely on the students, their families, and philanthropic organizations. Since correcting these issues will require a sustained effort over a long period of time, it’s critical that those in a position to help take immediate, meaningful action to offer support — financial or otherwise — while students and families also take steps to offset the long-term impact of graduating with substantial student debt obligations.

Link to data referenced in article: http://ticas.org/sites/default/files/pub_files/student_debt_and_the_class_of_2014_nr_0.pdf


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